Yahoo! Key Stats
- FoundedJanuary 1994
- HeadquartersSunnyvale, California
- Nasdaq TickerYHOO (delisted 2017)
- Revenue (2016)$5.17 billion
- Acquired ByVerizon, 2017 ($4.83B)
Yahoo! Inc. was one of the most visited websites on the internet through the 1990s and 2000s, operating a web portal, a widely used email service, and a portfolio of content properties covering news, sports, finance, and entertainment. At its peak in January 2000, the company’s stock closed at $118.75 per share and its market capitalisation exceeded $125 billion.
Jerry Yang and David Filo created Yahoo in January 1994 as a directory of websites they found useful while studying electrical engineering at Stanford University. The company incorporated in March 1995 and went public on the Nasdaq the following year, raising $33.8 million in its IPO at $13 per share. By 1998, Yahoo had grown into the most popular starting point on the web.
In 2017, Verizon Communications acquired Yahoo’s core internet business for $4.83 billion, merging it with AOL under a division initially called Oath and later rebranded Yahoo. The remaining holding company, which retained Yahoo’s stakes in Alibaba Group and Yahoo Japan, renamed itself Altaba and eventually wound down in 2019.
Yahoo! History
Jerry Yang and David Filo, graduate students at Stanford University, create a website called “Jerry and David’s Guide to the World Wide Web” in January 1994. The site organises other websites into a browsable hierarchy rather than a searchable index. In March 1994 they rename it Yahoo!, standing for “Yet Another Hierarchical Officious Oracle.” The yahoo.com domain is registered on January 18, 1995.
Yahoo incorporates in March 1995 with early investment from Sequoia Capital. The company goes public on the Nasdaq on April 12, 1996, raising $33.8 million. Within 18 months it becomes the most visited site on the web, reaching hundreds of millions of page views per day. Yahoo expands beyond its directory roots, adding email, news, sports scores, and financial data to become a full web portal.
At the height of the dot-com bubble, Yahoo acquires GeoCities for approximately $3.6 billion in stock and Broadcast.com for approximately $5.7 billion in stock. Both deals will later be judged among the worst acquisitions in internet history. GeoCities is shut down in 2009; Broadcast.com is quietly dissolved within a few years of its purchase. The acquisitions make Yahoo the biggest spender in a year of extraordinary internet valuations.
Yahoo’s stock closes at an all-time high of $118.75 per share on January 3, 2000. The dot-com bubble bursts over the following months. By September 2001, the stock reaches a post-bubble low of $8.11. The company begins using Google to power its search results in 2000, ceding technological ownership of its core product to a rival that would eventually surpass it in every major metric.
Yahoo acquires Overture Services, the pioneer of paid search advertising, for $1.3 billion in cash and stock in October 2003. The deal gives Yahoo Overture’s pay-per-click technology and its search marketing platform. In 2004, Yahoo ends its use of Google’s search engine and launches its own technology. In 2005, Yahoo acquires the photo-sharing site Flickr and purchases a 40% stake in Chinese e-commerce company Alibaba for approximately $1 billion — a bet that will ultimately prove to be worth tens of billions of dollars.
Revenue reaches $6.97 billion in 2007. In February 2008, Microsoft makes an unsolicited offer to acquire Yahoo for $44.6 billion, representing a 62% premium over the share price at the time. Yahoo’s board rejects the bid as substantially undervaluing the company. Three years later, Yahoo’s market capitalisation has fallen to $22 billion — roughly half of what Microsoft had offered. Co-founder Jerry Yang steps down as CEO in November 2008 following intense shareholder criticism over the Microsoft rejection.
Carol Bartz becomes CEO in January 2009. Under her tenure Yahoo signs a ten-year search partnership with Microsoft, handing Bing responsibility for powering Yahoo Search and sharing advertising revenue. The deal simplifies Yahoo’s cost structure but further distances the company from search — its original purpose. Bartz is fired by the board in September 2011. Scott Thompson briefly becomes CEO in January 2012 before resigning four months later amid a controversy over inaccuracies in his academic credentials. Yahoo cuts approximately 2,000 jobs, or 14 percent of its workforce, in April 2012.
Marissa Mayer, a senior Google executive, is appointed CEO in July 2012. Mayer’s arrival briefly lifts the share price, and she embarks on an acquisition programme that totals more than $2 billion across roughly 50 companies. The largest is the $1.1 billion purchase of blogging platform Tumblr in May 2013. In September 2014, Alibaba’s IPO on the New York Stock Exchange — the largest in US history at the time — values Yahoo’s remaining 15% Alibaba stake at roughly $40 billion, temporarily masking the deterioration in Yahoo’s core business.
Yahoo’s core advertising business continues to lose market share to Google and Facebook. In July 2016, Verizon Communications agrees to acquire Yahoo’s core internet assets for $4.83 billion in cash. The deal closes in June 2017. Yahoo’s holding company retains the Alibaba and Yahoo Japan stakes and renames itself Altaba Inc., which liquidates in 2019. The Yahoo brand and its suite of properties — including Yahoo Mail, Yahoo Finance, Yahoo Sports, and Yahoo News — continue to operate under Verizon’s media division, eventually rebranded as part of a new Yahoo.
Yahoo! Co-founders
Jerry Yang — Co-founder & CEO, 2007–2009
Born in Taiwan and raised in San Jose, California, Yang co-created Yahoo with David Filo in 1994. He served as the company’s chief Yahoo (an informal title) from founding and returned as CEO in 2007. His decision to reject Microsoft’s $44.6 billion offer in 2008 drew lasting criticism, and he resigned as CEO later that year. He left Yahoo’s board in 2012.
David Filo — Co-founder
Filo grew up in Louisiana and met Yang while both were doctoral students in Stanford’s electrical engineering department. He created the original directory with Yang in 1994 and served as chief Yahoo alongside Yang through the company’s early years. Filo took a background role in operations and engineering rather than management after Yahoo’s IPO, quietly remaining at the company far longer than any other early figure.
Yahoo! Market Cap
Yahoo’s market capitalisation peaked above $125 billion in early 2000 at the height of the dot-com bubble, then collapsed below $10 billion as the bubble deflated. The company recovered to approximately $38 billion by end-2007 before Microsoft’s rejected bid and the financial crisis drove it back down. From 2013 onward, Yahoo’s market cap was significantly inflated by its Alibaba stake rather than its core business — by 2015, analysts estimated the core business was worth close to zero after accounting for Yahoo’s Asian equity holdings and net cash.
Yahoo! Acquisitions
Yahoo completed more than 50 acquisitions between its founding and its sale to Verizon in 2017. Its deal history divides into three periods: aggressive bubble-era spending in the late 1990s, selective infrastructure deals in the 2000s, and Marissa Mayer’s talent-and-product acquisition spree from 2012 to 2016.
The two defining deals of the first period — GeoCities ($3.6 billion in stock, May 1999) and Broadcast.com ($5.7 billion in stock, July 1999) — were catastrophic. GeoCities, once the third most-trafficked site on the internet, was shut down in 2009. Broadcast.com, an internet video streaming service founded by Mark Cuban, was dissolved within a few years of purchase as slow internet connections made streaming impractical. Both deals are routinely cited among the worst acquisitions in internet history.
More disciplined deals followed. In October 2003, Yahoo acquired Overture Services for $1.3 billion in cash and stock. Overture had invented the pay-per-click advertising model that would power the internet economy, and the purchase gave Yahoo control of that technology and a large existing advertiser base. In February 2005, Yahoo acquired photo-sharing platform Flickr for an undisclosed sum. Flickr was the most popular photo community on the web at the time of acquisition, but Yahoo consistently underfunded its development, and it lost ground to Facebook and Instagram over the following decade. In October 2005, Yahoo bought a 40% stake in Alibaba for approximately $1 billion — the single best investment in Yahoo’s history. Yahoo acquired online job site HotJobs for $439 million in 2002 and advertising exchange Right Media for $524 million in 2007.
The Mayer era produced one standout deal: Tumblr, the blogging and social media platform, acquired in June 2013 for $1.1 billion in cash. At the time of purchase, Tumblr had over 300 million monthly visitors and 75 million blog posts arriving daily. Yahoo wrote down most of the acquisition’s value within three years; in 2019, Verizon sold Tumblr to Automattic, the owner of WordPress, for a reported price well under $3 million — a loss of more than 99% of the purchase price.
Yahoo also acquired RockMelt, a social web browser, in August 2013. The RockMelt team joined Yahoo’s product group, and all existing RockMelt applications were shut down. In March 2014, Yahoo announced a partnership with Yelp to improve local search results in an effort to compete with Google’s local listings.
Yahoo! Competitors
Yahoo competed across several product categories simultaneously — web search, display advertising, email, news, sports content, and finance tools — meaning its competitive field shifted depending on which segment it was trying to defend. By the mid-2000s, Google had emerged as its primary adversary in both search and advertising.
| Company | Country | Primary Competition | Status |
|---|---|---|---|
| USA | Search, display ads, email | Active | |
| Microsoft (MSN / Bing) | USA | Web portal, search | Active (search partner post-2009) |
| AOL | USA | Web portal, email, news | Acquired by Verizon, merged with Yahoo |
| USA | Display advertising, social content | Active | |
| Ask.com (IAC) | USA | Web search, Q&A | Active (reduced) |
| Excite / @Home | USA | Web portal, search (1990s) | Defunct |
| Lycos | USA | Web search, portal (1990s–2000s) | Reduced operations |
| Amazon (advertising) | USA | Digital advertising (2010s) | Active |
| Naver | South Korea | Web portal, search (Asia) | Active |
| Baidu | China | Search, web portal (Asia) | Active |
Yahoo! Revenue
Yahoo’s GAAP revenue grew from $5.26 billion in 2005 to a peak of $7.21 billion in 2008, then declined in most years through 2016 as Google absorbed an increasing share of digital advertising spending. Starting in 2010, Yahoo changed how it reported revenue following the Microsoft search partnership, excluding traffic acquisition costs paid to Microsoft. This creates a discontinuity in the reported figures. Revenue on a comparable basis held in the $4.5–$5.2 billion range from 2011 through 2016, but the company’s core advertising business was effectively declining in both volume and pricing through the period.
FAQs
Who founded Yahoo?
Jerry Yang and David Filo, both electrical engineering graduate students at Stanford University, created Yahoo in January 1994 as a directory of websites. They incorporated the company in March 1995 with backing from Sequoia Capital and took it public on the Nasdaq in April 1996.
What does Yahoo stand for?
Yahoo is an acronym for “Yet Another Hierarchical Officious Oracle.” The word “hierarchical” reflected how the original database was organised in layered subcategories. Yang and Filo also liked the slang meaning — a rude, unsophisticated person — which Filo’s college girlfriend had used to describe him.
Why did Yahoo reject Microsoft’s acquisition offer?
In February 2008, Microsoft offered $44.6 billion for Yahoo, a 62% premium over its share price at the time. Yahoo’s board, led by co-founder Jerry Yang, argued the bid substantially undervalued the company. Three years later Yahoo’s market cap had fallen to $22 billion, well below the rejected offer, generating lasting criticism of the decision.
Who acquired Yahoo?
Verizon Communications acquired Yahoo’s core internet business for $4.83 billion, closing the deal in June 2017. The assets were merged with AOL under a division called Oath, later rebranded as Yahoo. Yahoo’s remaining Asian assets — its Alibaba and Yahoo Japan stakes — were held by a separate entity renamed Altaba Inc., which wound down in 2019.
What happened to Tumblr after Yahoo acquired it?
Yahoo bought Tumblr for $1.1 billion in 2013 but failed to monetize the platform effectively. Yahoo wrote down most of Tumblr’s value within a few years. After the Verizon acquisition in 2017, Tumblr was sold to Automattic, the company behind WordPress, in 2019, reportedly for less than $3 million.
*Information from Forbes.com.
**Video published on YouTube by “ColdFusion“.